Reliance Retail begins Digital Currency Test Run with Innoviti Technologies, ICICI Bank and Kotak Mahindra Bank
Reliance Retail begins Digital Currency Test Run with Innoviti Technologies, ICICI Bank and Kotak Mahindra Bank

(Left to Right) V. Subramaniam, MD, Reliance Retail Ltd; Bijith Bhaskar, Head - DC, Payments & Partnerships, ICICI Bank; Deepak Sharma, President & CDO, Kotak Mahindra Bank; and Rajeev Agrawal, Founder & CEO, Innoviti Technologies Private Limited 


Indian digital payment has embarked on a new wave, with the Reserve Bank of India giving the status of legal tenders to ‘e₹-R’, formally known as Central Bank Digital Currency [CBDC]. Banking on UPI’s nationwide acceptance and popularity, this digital currency is on pilot run with SBI, ICICI Bank, Yes Bank, IDFC First Bank, and several other financial institutions. 

Announcing a historic test run with end-consumers, Reliance Retail, in association with Innoviti Technologies, ICICI Bank and Kotak Mahindra Bank, launched digital rupee for its Freshpik store at Jio World Drive, Mumbai.

The test run was announced at St. Regis, Mumbai, on February 2, 2023, and signaled the beginning of India’s retail transaction on digital rupee (e₹-R) from the city itself. Thought leaders V. Subramaniam, Director, Reliance Retail Limited; Deepak Sharma, President & Chief Digital Officer, Kotak Mahindra Bank Limited; Bijith Bhaskar, Head - Digital Channels & Partnerships, ICICI Bank; and Rajeev Agrawal, Founder & CEO, Innoviti Technologies Private Limited explained the methodology, importance, and distinctions of digital rupee, as opposed to UPI transactions. 

Digital Wallets to Resolve Concerns of Manual Transaction 

When asked how will digital currency add value over and above the seamless facilities of UPI, Mr Sharma underlined the goal to make India go completely digital and be saved from the hassles accompanying usage of cash.

“CBDC is designed to do away with creating, circulating, and storing physical currencies. The idea is to reduce dependency on physical cash while giving customers a similarly delightful experience of an offline cash transaction. Reliance Retail is providing the first at-scale use case in applying e₹-R. Both form factors of UPI and digital currency will co-exist, thus giving customers greater freedom to chose how they transact, instead of keeping money in lockers via cash," Sharma said.

Bijith Bhaskar agreed with Sharma, implying how CBDC will help a person do away with carrying physical wallets, as each bank authorised by RBI will provide its respective digital wallets for hassle-free use. 

“All types of denominations, be it a coin or a note, are available in CBDC, thus giving freedom to customers to pay in any denomination they want to. Once it’s accepted by all, CBDC will not only reduce the hassle of printing and distributing cash, but will also aid businesses who don’t need to handle physical cash,” Bhaskar added.   

First Retail Use Case at Scale in India

A total of 114 countries including India are developing their respective CBDCs and contribute to 95% of the global GDP. Adoption of digital currency will empower a large section of the Indian society who haven’t yet come under the UPI ambit. In his address, Subramaniam said that 98% of digital payment systems in India are now looked after by UPI. 

“Innoviti helped Reliance Retail begin its centralised POS system way back in 2006-07. Today, we operate in excess of 17,000 stores across 7000 cities in India. Since we run retail with technology, the official launch of this digital currency aligns with our ultimate motive of enhancing customer experience,” Subramaniam maintained. 

Users will get better cyber security than UPI transactions, which get routed through an open ecosystem before reaching another user or a vendor, for instance. “These transactions will be anonymous. This feature will accelerate adoption. Over a period of time, e₹-R will also be used offline, with your balance accessible only through your smartphones and not through bank accounts you use,” he added.

Digital currency will also serve the interests of merchants for whom credit cards and debit cards are an expensive proposition with a 2-2.5% charge on every transaction cost. UPI got popular because of its user-friendly procedure and vendors were not charged for receiving payments through that mode. Digital currency offers a similar experience with better security, he maintained.

Virtual Replication of Manual Currency

Rajeev Agrawal summarized the usage of CBDCs. A fungible legal tender, meaning the tokens issued are identical across account holders, e₹-R can also be exchanged for paper currency, he maintained. “UPI is a channel of transaction, while e₹-R is a digital form of money. One won’t need to have a bank account to own e₹-R. Innovations are likely to happen in order to make CBDC transactions successfully offline, without mobile network. 

Some of the consumer benefits mentioned were complete transaction privacy, complete elimination of counterfeit or soiled notes, and loss prevention of physical cash.

“Since the tokens belong to a person, it’s possible to retrieve the money in digital form, as opposed to manual loss,” he explained. Money movement to and from bank accounts also gets better with digital currencies replacing the frictions faced by the central bank in getting cash back to banks. 

For merchants, e₹-R assures settlement finality and no charge-backs. Reduction in cash management costs, pilferage, soiled notes, and counting are eliminated. Digital currency also becomes another tool for co-branded promotions for businesses in general. 

“The transactions are mandated through ledger processing, which removes possibilities of pilferage. Merchants holding wallets of different banks can also float money across banks by switching wallets. This facility empowers merchants to bargain for better rates to provide the on-demand float, thus increasing efficiency on the part of banks and ease of doing business for retail merchants,” he maintained.

Agrawal harped on RBI’s resolve to build trust with the existing usage of paper currency, demonstrating how e₹-R payments can be made in singular coins as well. All a customer at a point of sale has to do is inform about the choice of payment through digital currency. The denomination is keyed in and a dynamic QR will be displayed at the POS terminal. The code can be scanned through the digital currency app stored in the customer’s device. Upon approval of the password generated thus, the transaction will complete with a charge slip being printed in front of the cashier. The interface has been kept same for card-based and UPI-based payments in organised retail, so as to help points of sale. 

Mumbai to Decide Success Rate

Reliance Retail is the pioneering retail entity to introduce digital currency at the ground level. The rest of the reliance Retail doors will get e₹-R systems up and running in the next 4-5 months. All eyes are now on the success rate of the pilot run, which might help India go cashless sooner, without ever missing the benefits of cash payment. 

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